Declaring foreign bank accounts to the Spanish government

I’ve been hearing/reading (sorry can’t find a link right now) that the Spanish government will require all Spaniards to supply them with foreign bank account details (in an attempt to crack down on tax avoidance). From what I have read this applies to all Spanish residents – i.e. expats as well. So basically it looks like I’m going to have to supply the Spanish government with my UK bank details or face a fine.

Does anyone have any more information about this? Is anyone else aware of this?

Yes you are correct Chopera. The new law applies to all Spanish tax payers, corporate and private of whatever nationality. Agreement has been reached with the EU that all European banks will be forced into passing on personal details of foreign account holders to the Hacidenda. So much for confidentiality. 🙁 Sign of the times I’m afraid.

I agree there is then the issue of how it’s implemented and the motivations behind it. I have a number of foreign bank accounts and I am often asked to sign documents permitting exchange of information to other EU states. I’m guessing that’s just to cover themselves legally should they be asked to do it.

I can’t actually remember where I read it now but I do recall the EU implementing the agreement on bank information exchange. Perhaps it was the recent Fiscal Treaty.

As in all things, when it comes to taxation governments have you by the round things. I leave these questions to the accountants. That’s why we pay them. I contacted mine recently on reading of this new Spanish law. As you said it’s not effective yet. 😉

It’s been irritating me that I could not remember where I read about cross boarder bank information exchange. There is an EU directive going back to 2003 which supports this. I realise it relates to savings income but personal bank identity would also presumably be exchanged. Swiss banks have recently been given a 7 year exemption.

Currently if you are a Spanish or Eurozone tax payer you have to declare all your bank detailed information to the Hacienda/Revenue. That will in the future extend to overseas accounts. In addition cash bank transactions above €2.5K require a written explanation with supporting documents.

As with every fiscal law in Spain Hacienda do not have the resources to implement this law rigorously. There must be millions of people in Spain who have foreign bank accounts for perfectly valid reasons, with different systems for identifying account holders, etc. Cross referencing everyone would be a huge task.

So I can see 3 ways they would use this law: 1) to go after the serious tax dodgers 2) To implement capital controls should Spain be forced out of the euro (although they could do that without this law) 3) To use it as an excuse to fine people first and ask questions later (they could just send out letters to everyone with an NIE telling them they’ve got to pay a fine and if they think there is an error they can call this number where their call “will be attended shortly”)

My Spanish business accountant tells me that unless your earn more than 1000 Euros in interest per person (2k if a couple) then you don’t need to declare it.

I take it you mean an overseas bank account not the actual interest? That advice makes no sense. You need to declare interest to Hacienda with a bank certificate (renta). So the bank details would be revealed.

My Spanish business accountant tells me that unless your earn more than 1000 Euros in interest per person (2k if a couple) then you don’t need to declare it.

I take it you mean an overseas bank account not the actual interest? That advice makes no sense. You need to declare interest to Hacienda with a bank certificate (renta). So the bank details would be revealed.

My Spanish business accountant tells me that unless your earn more than 1000 Euros in interest per person (2k if a couple) then you don’t need to declare it.

I take it you mean an overseas bank account not the actual interest? That advice makes no sense. You need to declare interest to Hacienda with a bank certificate (renta). So the bank details would be revealed.

No I mean the actual interest earned, not the amount in the bank accounts of overseas accounts.

My Spanish business accountant tells me that unless your earn more than 1000 Euros in interest per person (2k if a couple) then you don’t need to declare it.

I take it you mean an overseas bank account not the actual interest? That advice makes no sense. You need to declare interest to Hacienda with a bank certificate (renta). So the bank details would be revealed.

No I mean the actual interest earned, not the amount in the bank accounts of overseas accounts.

Has anyone got any definite information about this please? The law seems to still be at a “project” stage, but presumably will soon be on the statute book. At present it appears that ANY account or VALUE held abroad by a person fiscally resident in Spain must be declared. For each item not declared the fine is 5000€ with a minimum of 10000€. So if you have a small amount in a Building Society, a post office savings account plus a small Life Insurance contract in the UK and you don’t declare them, that’s 15000€ if you’re found out. Also, there is no time limit on the taxman’s ability to discover these “hidden” assets, no matter how innocent they are. Rather threateningly, it is also stated that the tax man can go back as far as possible and apply maximum penal interest on any revenue not declared and may also consider that non declared amounts are undeclared income liable to Income Tax. It all sounds draconian enough to encourage a rush for the exit! Does any-one have any information on whether it’s law, are there limits under which a declaration is not necessary and when should the declaration be made?

I think you have summed the proposed tax laws up very well. The fact is that Spain is tightening up everywhere in an attempt to haul in revenue which the country desperately needs. France is doing the same thing.

There is huge capital flight from both countries happening as a consequence of the risks associated with the eurozone crisis and higher taxation and governments want to know where it’s all gone. 🙁

The real question is not the extent or scope of the new tax laws it’s the implementation and policing in practice which really matters. Spain is historically fairly hopeless at that, France is not. Money always leaves a trail.

If you consider yourself as risk get some good advice from a Spanish tax accountant.

This is a big issue that affects hundreds of thousands of British residents in Spain. I’ll try and do an article on it soon.

But I can say from my first conversations with lawyers that it might appear more dramatic that it really is. Some say that nothing has really changed, they are just making more noise about it than before because of the fiscal crisis. Some say the Spanish tax man will not be any more efficient than before. And let’s face it, la agencia tributaria doesn’t do a great job in Spain, let alone abroad. If they want to raise lots more money, the first place to clamp down is at home, not abroad. The black economy here is huge.

And let’s face it, la agencia tributaria doesn’t do a great job in Spain, let alone abroad. If they want to raise lots more money, the first place to clamp down is at home, not abroad. The black economy here is huge.

This may well be true, but maybe it would be better for the government and Rajoy’s popularity ratings if they focused more on overseas (and by definition ex pts)?

It would be far better if they encouraged foreigners to buy some of the properties they have deserted and made it less confiscatory to hold Spanish Property -like abolishing Inheritance Tax on all properties under 50000 to start-in Italy you have none of this problem. Enabling monies held in a Spanish account to be used to pay State Taxes when the owner dies. To enable a property to be left by a single person to a brother sister or even a civil partner on the same terms as to a spouse or sibling. At the moment they are simply saying we don’t want you so the property will go down until its cheap enough for the Spanish to buy it again.To let property on a guaranteed shorthold with fast repossession and a fair rate of tax not as much as 25%.To enable non residente to sell a property and reinvest it in another property without cgt -it being charged on the sale of the second property or subsequent property. This enables people to move within Spain without having to find more money apart from Impuestos de Compravent and increases the velocity of sales. Making an exchange of contracts between vendor and buyer compulsory as in UK before going to the Notary to clean out spiv estate agents and lawyers. Sorry a bit off topic but the Spanish would be better off by getting their building industry going again and getting a few more working again and this means to stop exploiting foreign buyers.

Jaime, if I understand the attached article correctly, if Hacienda discover an undeclared asset abroad any time in the future, then they will be entitled to consider the full amount discovered as undeclared earnings and tax them accordingly. Thus you’d suffer tax on the full amount, whether it had been taxed abroad or not, plus late payment interest, plus the fine for non declaration. Pretty draconian! As Mark has pointed out, the implementation by Hacienda may not be perfect. The trouble is, if you’re the unlucky one (as were the Priors with their house) then the consequences could be devastating.

With the very low interest rates that people are getting on their savings accounts it makes you wonder why the Spanish government is so bothered about people keeping money in foreign bank accounts unless of course they suspect that the money was made in the black economy without declaring the earnings to the Spanish tax man. It is clearly an indication of how desperate the Spanish goernment is to get more revenue given that it is basically broke.

Latest news is you only have to declare bank accounts and assets abroad if they have a value of €50,000 or more. So if you have 2 bank accounts, both with just €49,000 each in them, total €98,000, you don’t have to declare either of them.

But if you have a property worth €100,000 in the UK, for example, then you are obliged to declare that (if you are resident in Spain, of course)

Are you certain of you interpretation Mark? The linked document refers to “exceeding 50000€ for each TYPE of asset”, so perhaps a bank account is a “type of asset” and if you had two totalling 98000€ you’d be obliged to declare both of them, since for the TYPE of asset you hold in excess of 50000€. Plus the ludicrous “average value over the last quarter of the year” that has to be declared; how does one calculate THAT for assets held in shares??

Are you certain of you interpretation Mark? The linked document refers to “exceeding 50000€ for each TYPE of asset”, so perhaps a bank account is a “type of asset” and if you had two totalling 98000€ you’d be obliged to declare both of them, since for the TYPE of asset you hold in excess of 50000€. Plus the ludicrous “average value over the last quarter of the year” that has to be declared; how does one calculate THAT for assets held in shares??

Good point. I’m not certain about anything, ever. 😉 But it does now look like if you have a bank account back in the old country with a few hundred quid in it you now don’t need to declare it.

I have a friend who has been living and working here for 15 years. She’s not “resident” in Spain, works online, and pays tax in the UK. She has private health insurance. Its illegal because she’s here for more than 187 days a year (or however long it is). But she has no incentive to enter the Spanish legal and administrative system. In fact I did that myself for about 7 years back in the 1990s until I married a local girl. Makes you wonder whether its an option to return fiscally to the UK and just stay here anyway. Do they ask for evidence you’ve not been here?

Usually if the Hacienda find you have lived illegally in Spain they send you a back tax bill and it’s up to you to prove you have not. Which in your friends case would be difficult. Beware these penalties have recently been increased savagely. The parties over, live in Spain, pay tax in Spain or risk a great deal of money.

I’ve just completed the declaration on-line and found it a generally painless exercise…

And having spoken to someone at Hacienda, they confirmed that it doesn’t affect how much tax I have to pay in Spain as I am paying tax at source (in the UK).

Not strictly true, depends on an individuals tax affairs. Rates and bands are different in Spain. Even though the tax has been paid in the UK it needs to be decared to hacienda and the difference calculated. The tax paid in the UK is only set against it. If you have paid eg 5000 tax in the UK you may find when you decalre in Spain you owe hacienda an extra 400€ or so.

Are you certain of you interpretation Mark? The linked document refers to “exceeding 50000€ for each TYPE of asset”, so perhaps a bank account is a “type of asset” and if you had two totalling 98000€ you’d be obliged to declare both of them, since for the TYPE of asset you hold in excess of 50000€. Plus the ludicrous “average value over the last quarter of the year” that has to be declared; how does one calculate THAT for assets held in shares??

Good point. I’m not certain about anything, ever. 😉 But it does now look like if you have a bank account back in the old country with a few hundred quid in it you now don’t need to declare it.

Seems that Hacienda aren’t clear about some things. Pension pots have to be declared too. If the combined assets are over 700,000 then wealth tax is due. Many will be pulled in if they have property in both countries and generous pension scheme.

I’ve just completed the declaration on-line and found it a generally painless exercise…

And having spoken to someone at Hacienda, they confirmed that it doesn’t affect how much tax I have to pay in Spain as I am paying tax at source (in the UK).

Not strictly true, depends on an individuals tax affairs. Rates and bands are different in Spain. Even though the tax has been paid in the UK it needs to be decared to hacienda and the difference calculated. The tax paid in the UK is only set against it. If you have paid eg 5000 tax in the UK you may find when you decalre in Spain you owe hacienda an extra 400€ or so.

This is COMPLETELY truely! I spoke to Hacienda. They were very helpful. They looked at my income and confirmed that this does NOT affect how much tax I have to pay.

If you notice in my post, I said “I”. I did not, at any point, say that this was true for anyone else.

Archives

Archives

About This Website

I run this website for buyers, owners, and vendors of property in Spain. It’s all about information, and resources to get things done.

I try to provide the best guides, market analysis, and resources possible, but I can’t guarantee everything is correct and up-to-date, so you use this website at your own risk. Everything is provided in good faith, and I cannot be held liable for any problems resulting from information at this website.

Adverts at this website do not imply any recommendation. Always use an independent lawyer to do legal checks on your behalf before buying property in Spain.

Where I list companies and professionals with a service to offer I do so in good faith (and wherever possible in return for a fee). As far as I know, based on years of experience and feedback from users, they are reputable service providers. But I do not own or control them in any way, and cannot be held responsible for their conduct. You deal with them at your own risk.

NEW DEVELOPMENT SHOWCASE

My showcase is intended to help people identify what I consider to be interesting projects around Spain from reputable developers, whilst helping developers raise awareness of their projects. I charge developers a monthly showcasing fee but am not involved in sales beyond passing on enquiries.